The Indian government says it will strive to contain its fiscal deficit at 5.3 per cent of GDP during this financial year.
The target is "challenging", yet achievable, according to a government statement released yesterday that cited a speech by the finance minister, P Chidambaram.
India's strategy to achieve the target is to boost revenue collection and control expenditure, the minister said.
The country's fiscal deficit has ballooned because of government subsidies on fuel and agriculture. The government in September announced a reduction of fuel subsidies, as it increased diesel prices by 5 rupees a litre, in an effort to ease its expenditure. On Monday, India revealed a target to cut its fiscal deficit to 3 per cent by 2017.
"Serious efforts" are also being made to bridge the current account deficit, which stands at US$70.3 billion (Dh258.21bn) , according to the statement.
"Foreign investment is vital to achieve that, with Mr Chidambaram stating that foreign direct investment was "not an option, but an imperative, failing which we will have to rely on borrowings to meet the current account deficit".
He added that he was seeking the support of all the political parties in its effort to control India's fiscal and current account deficits.